In late October, the Canadian Radio-television and Telecommunications Commission ruled that Globalive Wireless Management Corp. is essentially controlled by non-Canadians and therefore cannot operate in Canada. While its legal ownership is primarily domestic, de facto control rests with its Egyptian partner, Orascom, and thus Globalive breaches regulations in the Telecommunications Act, the CRTC said.
This was a shock for a company that had bought hundreds of millions of dollars' worth of wireless "spectrum" and was gearing up to launch a new cellphone service called Wind Mobile across Canada within weeks. Hundreds of employees already hired were left in limbo. Now, the federal Industry Minister, Tony Clement, is weighing whether to overturn the CRTC ruling, or to take it to the cabinet for review. A decision is expected shortly.
It would be a mistake to allow Globalive to take part in the Canadian market unless it significantly changes its ownership structure to fully comply with the rules. The CRTC clearly outlined what the company needs to do to fall in line with the ownership regulations that are set out in the law. The other players in the market have to follow the current rules, so Globalive should as well.
This messy situation is a reminder, however, that Canada needs to rethink those regulations carefully. Some of the ownership restrictions are outdated in an era of international cross-ownership and investment.
If Canada is to have more competition in its telecommunications services, keep up with technological advances around the world and gain access to needed pools of capital beyond our borders, the regulatory environment must be more flexible. Canadian ownership restrictions may still have a place, but we require a full and thoughtful debate about what they should be.
Good advice has already been rendered on the issue. In March, 2006, a government-appointed review panel recommended the easing of foreign ownership rules for telecommunications firms that are not also broadcasters.
Whatever structure results from a rewriting of the rules, it should be much more streamlined than the current environment, in which multiple agencies enforce overlapping rules, and one arm of the government can overrule decisions made by another. In the meantime, Mr. Clement should not toss out the CRTC's decision on Globalive's participation in the cellphone market. The existing rules have to be enforced until they are rewritten to match the new telecommunications landscape.
